Basement Seen In Home Sales

April 25, 2009|From news services

WASHINGTON — - After a 74 percent slide from the peak in July 2005, U.S. sales of new homes appear to be bottoming out.

The pace of home sales, which hit a record low in January, jumped in February and was flat in March, the Commerce Department said Friday. And the inventory of new homes for sale dropped 5 percent from February levels.

"We believe that the bottom is at hand and that sales will begin turning in the second half of this year," wrote IHS Global Insight economist Patrick Newport. "As previous recessions show, demand for new homes does not evaporate altogether."

New-home sales fell just 0.6 percent in March, to a seasonally adjusted annual rate of 356,000 from an upwardly revised February rate of 358,000.

The report shows the slide in demand for new homes is ending after more than 40 months, wrote David Resler, chief economist with Nomura Securities.

"Sales and starts are at extremely low levels," he wrote in a note to clients. "But, probably having bottomed, they have nowhere to go but up."

That's not the case for prices.

The median sales price fell 12 percent from a year earlier, to $201,400. Prices are likely to remain weak for months as builders continue to clear inventories.

Sales rose more than 15 percent from February in the West. They sank more than 32 percent in the Northeast, were unchanged in the South and down nearly 8 percent in the Midwest.